Pharma and Healthcare Drive Biggest Online Ad Spending Gains

Entertainment, automotive, pharmaceutical and healthcare were the fastest growing vertical sectors for online advertising in the first half of the year, according to a new report from the Interactive Advertising Bureau. Still, the rate of growth fell from 23 percent in the first half of 2011 to 14 percent in the first half of this year.

The report performed by PricewaterhouseCoopers found that pharmaceutical and healthcare spending jumped nearly 45 percent year-over-year to $1.1 billion, accounting for 6 percent of all online advertising spend in the first half of the year. Automotive advertisers increased their collective spend by nearly 23 percent to $2.2 billion, while advertisers in the leisure travel, financial services, entertainment and media categories also increased their spend. Entertainment advertisers were another standout with spend increasing 33 percent to $729 million.

Although it tightened year-over-year spending by about 4 percent, retail accounted for 20 percent of total spend with $3.5 billion during the period. Financial services tied automotive for the No. 2 spot, increasing spend by nearly 14 percent to $2.2 billion, comprising 13 percent of all online ad spending. Telecom spending remained flat at $2.1 billion and its percentage of total spend dropped by 2 percent as a result.

Overall, online advertising revenues grew 14 percent from the first half of 2011 to $17 billion. While total spend is up from a year ago, quarterly spending has still not hit the $8.9 billion plateau the industry reached in the final quarter of 2011. Quarterly growth was down 7 percent in the first quarter of the year totaling $8.3 billion, and it bounced back by 5 percent to $8.7 billion in the second quarter.

Mobile was the fastest growing format, nearly doubling from the first half of 2011 to $1.2 billion, totaling 8 percent of revenue. With a 19 percent increase in total spend, search was the only other ad format to make overall gains, jumping to 48 percent of all revenues at $8.1 billion.

Display advertising increased 4 percent to $5.3 billion, accounting for 33 percent of total revenues. Lead generation revenues jumped 4 percent to $834 million while classifieds remained flat at $1.2 billion and email was down about 1 percent to $78 million.

Advertisers are also pushing a larger share of their spend on performance-based pricing models. About 67 percent of revenues, or around $11.5 billion, were priced on a performance basis while 31 percent, or nearly $5.2 billion, were priced on a CPM. Hybrid revenue pricing models declined year over year from 5 percent to just 2 percent.

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